On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions:•The lease is noncancelable and has a term of 8 years.•The annual rentals are $28,900, payable at the beginning of each year.•The interest rate implicit in the lease is 12%.•Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for $1 at the end of the lease term, December 31, 2026.•The cost of the equipment to the lessor is $144,000, and the fair value is approximately $160,800.•Ballieu incurs no material initial direct costs.•It is probable that Ballieu will collect the lease payments.•Ballieu estimates that the fair value is expected to be significantly greater than $1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of $28,900 discounted at 12% is $160,792.58 (the $1 purchase option is ignored as immaterial). RequiredPrepare all the journal entries for Ballieu for the years 2019 General JournalShaded cells have feedback. XHow does grading work?PAGE 1GENERAL JOURNALScore: 65/101DATEACCOUNT TITLEPOST. REF.DEBITCREDIT1Jan. 1Lease Receivable2Sales Revenue160,792.5834Equipment Leased to Others56Cash7Lease Receivable15,827.118Interest Income15,827.11Points:12 87 120

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Quickbooks Online Accounting

3rd Edition

ISBN:9780357391693

Author:Owen

Publisher:Owen

Chapter10: Financial Statements And Reports

Section: Chapter Questions

Problem 2.3C

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Question

On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions:

•	The lease is noncancelable and has a term of 8 years.
•	The annual rentals are $28,900, payable at the beginning of each year.
•	The interest rate implicit in the lease is 12%.
•	Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for $1 at the end of the lease term, December 31, 2026.
•	The cost of the equipment to the lessor is $144,000, and the fair value is approximately $160,800.
•	Ballieu incurs no material initial direct costs.
•	It is probable that Ballieu will collect the lease payments.
•	Ballieu estimates that the fair value is expected to be significantly greater than $1 at the end of the lease term.

Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of $28,900 discounted at 12% is $160,792.58 (the $1 purchase option is ignored as immaterial).

Required

Prepare all the journal entries for Ballieu for the years 2019

General Journal
Shaded cells have feedback. X
How does grading work?
PAGE 1
GENERAL JOURNAL
Score: 65/101
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
Jan. 1
Lease Receivable
2
Sales Revenue
160,792.58
3
4
Equipment Leased to Others
5
6
Cash
7
Lease Receivable
15,827.11
8
Interest Income
15,827.11
Points:
12 87 120

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